Salesperson

If you work as a
salesperson or sales representative, you should receive Form W-2, Wage and Tax
Statement, from your employer. If you received a Form W-2 and the "Statutory
employee" check box is marked in Box 13, report that income on Schedule C,
Profit and Loss from Business. Statutory employees include:

Full-time life insurance sales agents

Certain agent or commission
drivers

Traveling salespersons

Certain homeworkers

Payments that you receive as an independent sales representative outside of
or in addition to your regular job may be considered income from
self-employment and are reportable on Schedule C. For example, self-employed
income includes occasional sales commission payments, bonuses or referral fees
received from a company other than your regular employer. For such
arrangements, you may account for the income amounts yourself or you may
receive a Form 1099-MISC, Miscellaneous Income. Self-employed income would also
include amounts received as a sole proprietor providing independent sales
services to one or more companies. If you are self-employed and your net
earnings are $400 or more, you must pay self-employment tax on the income you
report on Schedule C. In addition, you may need to make estimated payments to
cover the amount of self-employment tax or income tax associated with the
income you report on Schedule C.

As an employee, you may be able to
reduce your taxes by deducting unreimbursed job-related expenses. These
expenses may be claimed as 2% limited miscellaneous itemized deductions or, if
based on self-employment income, they may be deducted on Schedule C. You should
keep receipts to substantiate these expenses. Examples of some of the items you
may be able to deduct include:

Subscriptions to trade journals
related to your work

Dues for trade associations or professional
associations

Insurance premiums for protection against liability or
wrongful acts

Specialized equipment or tools that are replaceable
within one year

The cost and upkeep of uniforms if they are required
for work and not suitable for everyday wear

State or local government
regulatory fees, licenses, or flat rate occupational taxes, provided these fees
are not paid for initial certification or licensing

Car and truck
expenses when getting from one workplace to another within the general area
where your business is located, visiting clients or customers, and going to
business meetings away from your regular workplace

Travel expenses for
traveling away from your business home if you are required to be away from home
for longer than an ordinary day's work - examples of deductible travel expenses
include transportation by air, bus, or car using the standard mileage rate or
actual expenses, tolls and parking fees, lodging, and meals and entertainment
(with limitations)

You also may be able to deduct work-related
unreimbursed education courses or seminars if they meet certain requirements.
Qualified education includes refresher courses, courses on current
developments, and vocational courses. However, education that qualifies you for
a new trade or business or that helps you to meet the minimum education
requirements of your present trade or business is not deductible. For example,
a soft drink sales representative cannot deduct the expenses for the study of
marine biology as work-related education, although the tuition for such courses
may qualify for the American Opportunity or Lifetime Learning Credit.

Additional unreimbursed expenses may be deductible if you are a self-employed
sales representative filing Schedule C. Examples of some items you may be able
to deduct include:

Business bad debts

Employee salaries or
other forms of compensation such as bonuses or commissions you pay

Legal and professional fees, such as accounting or legal advice that are
directly related to the operation of your business

Rental expense for
business use property such as equipment rentals or storage facilities